The IPO of General Insurance Corporation of India was fully subscribed on Friday.
The initial public offering (IPO) of General Insurance Corporation of India (GIC Re) was fully subscribed on Friday, the concluding day of the offer, with investors bidding for 16.77 crore or 1.35 times against a total of 12.47 crore shares on offer.
The quota for qualified institutional buyers ( QIBs) was oversubscribed with wholesale investors bidding for 14 crore shares against the 6.22 crore shares reserved for them.
However, high net worth individuals (HNIs) bid for 41.08 lakh shares against 1.86 crore shares reserved for them.
Retail investors had bid for 2.35 crore shares against 4.35 crore shares reserved for them. Employees bid for 1.34 shares against 1.44 lakh shares reserved for them.
GIC Re, India’s largest reinsurer is planning to raise around `11,372 crore from its IPO. The company has set a price band of Rs 855- 912 per share for its IPO, and when calculated at the upper band of the issue price, the company will be valued at around Rs 80,000 crore.
GIC Re’s issue will be the third biggest in the history of the domestic markets after Coal India and Reliance Power. Coal India had raised `15,470 crore in October 2010 and Reliance Power raised Rs 11,700 crore in 2008. Last month, two insurance companies, SBI Life and ICICI Lombard, had raised `8,400 crore and `5,700 crore respectively through their IPOs.
The IPO is part of the government’s disinvestment programme. So far in FY 18, the government has raised Rs 19,758 crore through disinvestment and strategic disinvestments of public sector enterprises as against its target of `72,500 crore. GIC Re’s IPO could fetch about Rs 9,804 crore to the government and the remaining `1,568.64 crore to GIC Re.
According to its red herring prospectus (RHP), the company accounted for approximately 60% of the premiums ceded by Indian insurers to reinsurers during FY 2017. The offer comprises fresh issue of 1.72 crore shares and an offer for sale of 10.75 crore shares.
Retail investors and eligible employees of the company were illegible for a 5% discount. The offer constitutes 14.22% of the post-offer paid-up capital. GIC Re is a fully-owned government company and post offer the government holding will come down to 85.78%.
The IPO was managed by Citi, Axis Capital, Deutsche Bank, HSBC and Kotak.
The company’s gross premiums in FY17 stood at `33,741 crore and it posted a net profit `3,140 crore. The company’s gross premium grew at a compounded annual growth rate (CAGR) of 48.65% from FY 15 to 17. The company’s net profit grew at a CAGR of 4.23% during the same period.
As of June 30, 2017, the company underwrote business from 161 countries. The company provides reinsurance across many business lines including fire (property), marine, motor, engineering, agriculture, aviation/space, health, liability, credit and financial and life insurance.
In 2017, 25 companies raised Rs 42,054 crore through IPO. Listing gains and returns by newly listed companies as also the positive sentiment in the broader market are among the reasons attributed to the trend.
SBI Life, ICICI Lombard, BSE, HUDCO, CDSL, Avenue Supermarts, Shankara Building Products, S Chand and Company, and Cochin Shipyard are some of the companies that have completed their IPO in the past nine months.
GIC Re is scheduled to debut on the bourses on October 25.